Market Overview

Citi Initiates Coverage On SuccessFactors With A Buy, $45 PT

Share:

SuccessFactors (NASDAQ: SFSF) has consistently shown an ability to up-sell new products into its base and drive larger deal sizes with new customers. With new products such as EmployeeCentral and Calibration, Citi expects this will continue. Up-sell of new products drives escalating customer lifetime value, the most important lever of value creation in SaaS. SF has traded at a premium to the SaaS universe due to its ability to up-sell, and Citi believes this premium will persist.

SuccessFactors is reinvesting in growth and is poised to capture catch-up spending. Citi believes consensus estimates imply a massive deterioration in sales productivity. Citi's billings estimate of $350M for FY11 is 8% ahead of consensus $325M, which is the largest positive variance in Citi's estimates vs. consensus in its coverage universe.

Superb sales execution will be required to maintain above-peer growth rate, there is some risk of large and disruptive M&A needed to build out the suite and the talent management market continues to be competitive.

SFSF closed Wednesday at $37.01

 

Related Articles (SFSF)

View Comments and Join the Discussion!

Posted-In: Analyst Color Initiation Analyst Ratings

Latest Ratings

StockFirmActionPT
PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com